lots of new renovations out there: how to weigh the value of a fixer-upper against one ready to move into?

Asked by Huh, huh Mon Sep 24, 2007

I'm ready to look for a fixer-upper in Cambridge, MA, where the market is full of new renovations and there are not many places 'in need of some tlc' left. Prices of new renovations are coming down. I'm thinking of the purchase in part as a long-term investment and wondering how to decide: buy one where someone else has done the work and hold it until the values go back up, or buy one on which I do the work and hope the renovation adds enough value to justify it. Any guidelines out there? opinions? What does the price delta need to look like?

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Sean Waters -…, , Boston, MA
Fri Sep 28, 2007
I have an opinion on this one, not necessarily a guideline. First of all, it is good that you see the purchase of a property as a long term investment. Stay away from those interest only loans! Yes, there are many new consruction units on the market, and a buyer could potentially get a good deal. If by chance you could find a fixer-upper, and a really good price to allow you to gain at least $100K, and hopefully more. Then you have to ask yourself is a fixer-upper a dream you have always had? If so, the gratification you can receive from "building" your own home is amazing. I bought a fixer upper, and spent about double the amount I had expected (be prepared for this!). I still have plenty of equity, but just as important is that I was able to build the house the way I wanted. There is nothing quite as satisfying as making your dream home now! Not having to wait when you retire. But there are headaches involved in gutting a home, and basically playing project manager, but the headaches are worth it. You learn so much!
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Jon Ernest, , Brookline, MA
Mon Sep 24, 2007
I've spent the last 10 months of my life doing this to a three family in Cambridge on Allston St. In all fairness, it really depends on the property. There's not a lot of fixer uppers on the market (condos) because those units aren't selling, you'll have more competition from buyers looking to do the same thing. On the flip side, with a bunch of new renovations on the market, those sellers are the ones fighting to get their place sold before the other guy. For you, it sounds like this is going to be your primary residence, so my best advice is find something you'll be happy with whether it's a fixer upper, or an already fixed, cause you're going to be stuck there for a while. And keep in mind, fixer uppers also have costs other than monetary (mostly time and stress, trust me).

Regardless, for a long term purchase, timing is going to affect your potential profits more than anything else. A down market is a great time to buy, and an up market is a great time to sell, if you can follow that, you'll be fine no matter what you do.
Web Reference:  http://www.spotlightre.com
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John Savigna…, Agent, Hopkinton, MA
Mon Sep 24, 2007
The short answer- there are probably a lot of homes out there right now in this market that are being sold for less than what people have put into them. As a buyer in this market you have a lot of leverage with a motivavted seller. If you find a property already fixed up and you really like it, buy it at the right price. You may not be able to replicate it for the same money.
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ian cockburn, Agent, New Orleans, LA
Mon Sep 24, 2007
Doing the work yourself, if you do it right is always the way to get the highest return on your investment...but I strongly suggest let someone who does certain trades for a living install floors, and such things that are very visible to a possible buyer..for the devil is in the details, as with a potential buyer.

Never "hope" anything justifies...get some real prices for a house that needs renovations...don't guess at anything. If anything, you want to renovate kitchens, bathrooms and make the living room have a speccial touch.
Get the average priced faucet...especially Delta's. At the end of the day, people don't buy a house because of a facuet.
Web Reference:  http://www.iansellsnola.com
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